John Healey Extends Electricity VAT Cut in Autumn Budget
Chancellor John Healey extended the electricity VAT cut until July 2027 and increased the Bank Corporation Tax Surcharge to fund the measure.
John Healey announced in his Autumn Budget speech that the value-added tax cut on electricity bills will be extended until July 2027. The government estimates this tax removal will reduce the annual price cap by £50.
To fund the extension, the Bank Corporation Tax Surcharge will increase from 3% to 6% for a 15-month period ending March 31, 2028. Healey described these measures as part of the "radical changes" required for the energy sector, following a prior decision to abolish gas bill standing charges.
Additionally, the government introduced the British Industrial Competitiveness Scheme. Starting in April 2027, the program will support 10,000 eligible firms in electricity-intensive Industry Strategy sectors by reducing their electricity bills by up to 25%.
